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The IRS offers many different ways to exclude income from your taxable income. Although it is impossible to briefly list all of these deductions, some are more important than others. Frequently, the Internal Revenue Code offers tax deductions to provide an incentive for taxpayers to engage in certain socially beneficial activities — business activity and home ownership are two examples.

Personal Exemptions

You may claim a dependent exemption for yourself and for any close relative for whom you provide more than 50 percent financial support. This means that you can never claim someone, including yourself, that someone else is entitled to claim. For 2012, the standard deduction is $3,700 per person. If you don't itemize your deductions, you can also take the standard deduction. The value of the standard deduction varies according to your filing status — single, for example, or married and filing jointly. As of 2012, the value of the standard deduction ranges from $7,250 to $16,200.

"Above the Line" Deductions

The IRS allows you to deduct certain expenses from your taxable income even if you don't itemize your deductions. This means that you can claim them together with the standard deduction. These expenses include certain health care expenses, post-secondary school tuition, moving expenses, alimony and student loan interest.

Business Expenses

Most business expenses are classified as itemized deductions. To deduct these expenses, they must be "ordinary and necessary" and not reimbursed to you by anyone. They must arise from an activity with a primary business purpose — you can't write off a vacation to Disneyland, for example, just because you had lunch with a potential client during the trip. You can write off many different types of business expenses including travel, lodging, entertainment, meals, subscriptions to professional journals and training required by your employer. The IRS applies restrictions on some of these restrictions — you can only write off 50 percent of business meals, for example, on the assumption that you would have eaten even if you hadn't been doing business. The total of all itemized business expenses must not exceed two percent of your adjusted gross income.

Losses and Depreciation

You may write off capital losses — losses that occur when you sell investment property, such as corporate stock, for less than your cost of obtaining it. Although the maximum capital loss deduction is $3,000 per year, you may carry excess losses forward to subsequent tax years. If your business uses the accrual method of accounting, you can also deduct bad business debts. Additionally, you can write off a depreciation allowance based on the value of property held for business or investment purposes. To write off depreciation, you must deduct a certain percentage of its value every tax year over the entire useful life of the item.

Investment Expenses

Generally, you may write off up to two percent of your adjusted gross income for investment expenses. Investment expenses are expenses that arise from investment activity. A hobby is not an investment activity — you purpose must be making money. Expenses must be incurred incident to an attempt to produce or collect income, or to manage property that you hold for the purpose of producing income. Examples of deductible expenses include interest on loans that you take out to raise funds to invest, attorney's fees, office rent and fees for investment advice.

Home Mortgage Interest

You may deduct interest you pay on a loan secured by your primary home or secondary residence. Interest includes not only the interest portion of your installment payments, but also amounts needed to secure the loan in the first place, such as loan origination fees. You can only deduct all of your home mortgage interest if the mortgage was worth no more than $1 million throughout the tax year ($500,000 if you are married and filing separately). You can deduct amounts you borrowed against home equity only if you used the proceeds to improve your home.

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About the Author

David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

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